By John Manning, International Banker
“We put our clients’ interests at the heart of what we do and strive to offer them at all times a high-quality service and relevant solutions.”
That is one of the four cornerstones that make up the overarching business strategy of KBC Group, the Brussels-headquartered bank-insurer that has emerged over the last few years as one of Europe’s strongest and most formidable financial institutions. Of course, customer service is something that all institutions consider important for generating success. But few have demonstrated standards in this realm that are as consistently high or as forward-thinking as KBC’s.
Perhaps this shouldn’t come as a surprise. After all, one of KBC’s key performance indicators focuses entirely on the customer experience—to “achieve a higher score than the peer group average”. And by being both a bank and an insurer, customers already have a wealth of products and services from which to choose from the outset—a greater number than they would have access to at most other financial institutions. Indeed, offering clients a unique bank-insurance experience is one of KBC’s primary objectives. With payments, cash management, asset management, trade finance, leasing, corporate finance, and money- and capital-market products being just some of the banking products on offer, adding a full suite of life and non-life insurance products to the mix means that customers can take advantage of having just one institution serving virtually all of their banking and insurance needs. This comprehensive products and services offering is available 24/7 in an omni-channel environment, combining mobile and online channels with contact centres and brick-and-mortar banking and insurance agencies.
As KBC Group’s 2017 annual report observes, “Our bank-insurance model…enables us to achieve various commercial synergies”. In practical terms, this means that almost 80 percent of its Belgian clients who arranged home loans with KBC Bank last year also took out mortgage-protection coverage with KBC Insurance, and more than 80 percent purchased KBC’s home insurance. And in the Czech Republic, more than 60 percent of those who took out home loans also purchased home insurance from the group. Around half of Belgian households that bank with KBC Bank also hold at least one KBC Insurance product, while roughly 20 percent of such households, in fact, hold three banking and three insurance products from the group.
But it’s not just the sheer number of products and services available, nor the synergies between them, that elevates KBC’s customer service to the upper echelons. It is also the group’s unwavering dedication to operating as a customer-centric financial institution that is enabling it to go the extra mile. And although KBC has always strived to put the customer firmly at the front and centre of its strategy, it has recently acknowledged that the means and methods by which it achieves success with customers must change.
Such evolution in thinking has largely been prompted by the changing nature of customer behaviour, especially since the dawning of the banking industry’s digital age. As such, KBC now aims to bring convenience, simplicity and continuous 24/7 availability of service to its customers. And that requires being fully committed to earning customers’ trust on a daily basis, whether that be in its home market of Belgium or one of its other core markets of Bulgaria, the Czech Republic, Hungary, Ireland and Slovakia. Ultimately, that means prioritising customer needs over and above any particular banking or insurance product as the starting point.
As with many financial institutions at present, digitalisation is a key transformative process currently being undertaken by KBC. The omnichannel approach that it has chosen to cultivate throughout the group is ensuring that it can seamlessly integrate its various distribution channels: online, mobile, brick and mortar, and contact centres. But as far as new digital initiatives are concerned, maximisation of the customer experience remains firmly at the forefront of the group’s digital objectives. According to Erik Luts, KBC’s Chief Innovation Officer and Executive Director, “the customer experience is continuously assessed and challenged by specialists in UX (user experience) and graphical design” during the development of all-new innovations.
But rather than simply testing such developments out in research labs away from the scrutiny of consumers, hands-on customer input is an integral part of the process at KBC, wherever possible. For example, it recently decided to invite 1,000 customers to try out contactless payments using various fashion accessories such as a ring, watch, bracelet or key ring, each of which had an embedded contactless chip. Such trials will take place across the span of a year, with customers having the opportunity to try the products in various cities throughout Belgium. Customers will also reportedly be sent a regular newsletter by KBC to inform them of the progress being made. Such methodology provides a clear indication of both the thoroughness with which KBC develops its products and the considerable value it places on customer feedback.
In fact, rigorous customer testing and responding to customer feedback was very much the basis for KBC Ireland’s new app that it launched in August and that is among the most exciting digital-banking products to have been launched in 2018. The app includes a wealth of innovative features, many of which have been first to market. In addition to allowing customers to receive instant credit cards and digital personal loans, the app is the first to feature an instant replacement service for lost or stolen cards. KBC Ireland customers can instantly apply for a replacement, which will go into their digital wallets and continue to make purchases hassle-free.
Indeed, when it comes to innovation within the KBC Group, KBC Ireland is unequivocally one of the frontrunners. As one of KBC’s most recent core-market additions, the lack of legacy branches in Ireland has meant that its development into a “digital-first” institution has been a much easier process to execute than in KBC’s other core markets. As such, KBC remains the only bank in Ireland that can fully onboard clients digitally. It has also been the first to market a number of digital differentiators including Android Pay, Apple Pay and 360° virtual property viewing. And it is now being recognised by customers and industry peers alike as a standout provider of digital products, winning several awards for both its digital offerings and its distinctive marketing approach. “Its brand is perceived as different and dynamic and setting the trends,” according to Mr. Luts. For instance, the unit has a dedicated customer-service account on Twitter that allows communication with customers directly and which plays an important role in ensuring it can be responsive to changes in customer preferences.
But although the Ireland unit is one of KBC’s digitalisation frontrunners, the group’s other core markets are hardly lagging behind. Its Belgium operation, for example, recently introduced PSD2 (Payment Services Directive 2) compliant transfers with KBC Mobile from the accounts its customers hold with other banks, as well as balance enquiries of those accounts. Launching such a facility means KBC is offering one of the first fully operational multi-bank apps in the market. Mobile services also include automatic-payment facilities for parking as well as blocking of debit and credit cards in case of suspected abuse. In core markets Bulgaria and Hungary, meanwhile, “digital firsts” have also recently been achieved—with the former seeing Mastercard and CIBANK (which has since merged into United Bulgarian Bank AD, acquired recently by KBC) join forces to launch the first automated teller machine (ATM) to accept cards and devices for contactless payments, and with the latter seeing its Mobile Wallet app allow clients to make payments via their mobile devices.
The bank is also trying to simplify the investment process for its customers by conveying to them that substantial amounts of initial capital, effort or complexity are not required to start investing. With that in mind, it recently introduced a “spare change” investing feature to its app, one that provides customers with the option to direct their spare change from transactions into an investment plan. Extra change is accumulated by rounding up customers’ transactions to the nearest euro; and once it hits €10, it can be invested in one of the bank’s funds, as well as be tracked via the app. As explained by KBC’s General Manager of the Digital Transformation Karin Van Hoecke, in Belgium, the service is like having “your glass jar full of change”, although in this instance, “it’s in the form of an investment fund”.
Nor is its customer base perceived by KBC as simply one giant, monolithic block that must be resigned to one-size-fits-all solutions. On the contrary, individual products are developed to serve different sub-groups and demographics based on more specific requirements. In 2016, for instance, K’Ching was launched as the first banking app for young people. To ensure that updates to the app are implemented effectively, developments are carried out “in close consultation with the young people for whom it is primarily intended”. This has allowed upgrades to be successfully integrated into the app such as the Timeline, which shows customers useful information on new features, news, upcoming events, discounts and deals that might interest them; while young customers’ parents have a family dashboard in their KBC Touch online banking tool to better manage their children’s K’Ching product portfolios.
With clear efforts being put into developing its customer-centric model, therefore, it should be stressed that such efforts are already being rewarded handsomely, especially as far as positive customer experience is concerned. KBC Bank Ireland’s most recent quarterly report for third-quarter 2018 notes that almost 20,000 new customer accounts were added during the quarter, bringing the total number of accounts added in the first nine months of 2018 to more than 60,000. This new growth, according to KBC, has been “primarily driven by market-leading products and digital innovation”. Since its app was launched in late August, moreover, digital activity has increased by 47 percent compared to third-quarter 2017. And the number of mobile-wallet transactions has increased by 183 percent when compared to the same period last year, with the value of those transactions growing by a staggering 287 percent.
Wim Verbraeken, KBC Bank Ireland’s chief executive, chalks such spectacular growth up to its customer-centric innovation, which “is at the core of everything we are doing in Ireland”. According to Mr. Verbraeken, it is “reassuring to see that our investment and dedication to innovation is resonating with our existing and new customers”. And perhaps even more impressive is the fact that similar sentiment is being echoed right across the institution, not just in Ireland.
But KBC is not about to rest on its laurels anytime soon. Although it has successfully recognised the changing nature of customer preferences, which in turn has helped the bank-insurer to evolve and achieve unbridled success in recent years, it also acknowledges that further changes lie ahead. “The main disruptor to our business is not technology. Digitalisation is only an instrument. The main driver for disruption today and tomorrow will be the changing customer behaviour,” according to Group CEO Johan Thijs. “Banking customers expect a 24/7 availability and instant response to their financial needs, just as they are used to the same kind of convenience in e-commerce. Our underlying processes will have to be able to provide that convenience, requiring substantial investments in redesigning not only our core systems but especially the mindset of all our employees.”
So, additional transformation appears to be in the offing for KBC, in terms of further refining its customer-centric model. But given how well it has adapted to the changing consumer landscape in recent times, it seems more than likely that it will be able to accommodate further changes with considerable ease.